With so many people changing their spending habits and looking for ways to build their wealth, investing has become more trendy than ever. The pandemic has changed the way people think, shop, do business, and even invest. Just about every activity has been taken online, including seeking financial advice and investing.
Robo-investing platforms have been around for several years, but with more people looking online for just about everything, the number of platforms has grown tremendously. For first-time investors or even seasoned investors who are new to online portfolios, knowing who to trust can be difficult.
Betterment is one of the bigger names that has grown in popularity in recent years. In fact, it is one of the largest platforms, which is one of the main reasons we are writing a Betterment SRI review.
While some Robo-investing platforms offer basic algorithms to build investment portfolios, this is a step above the rest.
It targets new investors and seasoned veterans alike with low fee options and available human advisors on hand if you need some extra advice. They also offer management accounts for cash reserves so you can house your investments and your supplementary funds all in one place.
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What is Betterment Socially Responsible Investing?
To have a comprehensive Betterment SRI review, we first need to talk about what Betterment SRI actually is.
This is a US-based financial advisory company. They offer cash management services in addition to SRI Robo-advising services to the public.
Based in New York City, the company is a Financial Industry Regulatory Authority member and registered with the SEC. In short, this company is a money management service that offers modern options for investing. It is also one of the largest online advisors fully independent and focused on the generation of positive returns for its customers.
Betterment allows customers to invest in diversified portfolios by offering SRI stocks and EFTs of both local and international companies.
Clients can invest according to whatever risk level they are comfortable with and handle both buying and selling on your behalf. More than just an online brokerage house, the platform works with clients to help them reach their financial goals.
You can set a monetary goal or set a time frame for which you would like to see returns on your investment. They have a range of tiers and options for investment that range from high yield to long-term bets.
The tools on the platform are goal-oriented, and the company even offers tax strategies to help users maximize their returns.
With additional investment or a higher rate plan, clients can also avail human advisor feedback if required.
See Related: Best ESG Stocks to Invest in Today
How to Sign up For Betterment SRI & How Betterment SRI Works
As part of our efforts to create a highly detailed Betterment SRI review, we will also let you know how to sign up and start investing on the platform. It takes about 15 minutes from start to finish, so you will be on your way to investing in your future in no time.
There are 10 screens that you will encounter during sign-up, each of which will have a couple of questions. These questions will not only guide you through the process but will help the platform build a profile for you that will best suit your investment needs.
On the homepage, you will start by clicking the signup button and choosing which type of investment plan is best for you. It will ask if you are a first-time investor or if you are a seasoned investor.
Next, you will be guided to select your first investment goal. Generally, this will be a retirement income figure and a suggestion for stock allocation that will best help you reach your investment goal. You have a chance to choose between 4 accounts; SEP IRA, Traditional IRA, Regular taxable account, or a Roth IRA. You can look deeper into each choice or even the goal projection if you prefer.
In the next step of your account creation, you will be tasked with reviewing your selected goals, and you will also get to look at the offered features of your chosen account type. If you don’t understand any of the terms, simply clicking on the term will give you a deeper explanation.
Next, you will be taken to the portfolio asset allocation menu. In this area, you will be shown the ETFs used to build your portfolio and a detailed analysis of each one.
You can always do your own research on each ETF that will be in your investment portfolio before committing. The screen will also let you know what the allocated percentages with be. Once you are satisfied, you will be asked to continue your sign-up process.
At this point, you will need to give some basic information about yourself. Namely, your email, password for the account, and personal identification information. You will also need to give your legal address, phone number, and optionally, who or how you came to know about the platform.
In the next step, you will need to verify your identity by providing your DOB, gender, and social security number. Once you have verified this information, you will need to fill out your financial information, such as your income, assets, and work details. You will also need to answer some mandatory regulatory questions.
See Related: Reasons to Start Social Impact Investing
Is Betterment SRI Legit?
Betterment SRI is a legitimate investment tool. The company is licensed and registered to conduct financial transactions both locally and internationally.
The business falls under the regulations of the SEC, among others. Betterment SRI, like most Robo-advisors, has joined FINA (Financial Industry Regulatory Authority).
Though this is a self-regulatory organization, it allows investors to check the legitimacy and performance records so that a human advisor can be cross-referenced.
As far as the SEC is concerned, Robo-advisors retain the same legal status and responsibilities as traditional human investment advisors. They must be legally registered and in good standing with the SEC to provide services to the public.
They are also subject to the same rules, regulations, and securities laws as traditional investment brokers. Consumers can look up Betterment SRI on BrokerCheck to find more detailed information regarding their services and status with the SEC.
It is important to note that any assets held or managed by Betterment SRI on your behalf are not FDIC insured since they are investment funds and not traditional deposits.
See Related: Examples of the Collective Impact Model
Betterment SRI Pros
Of all the Robo-advisors out there, Betterment offers great minimums on deposit. Specifically, for their digital offerings, there is no minimum required. The premium with human access carries a 100k minimum balance, however. That being said, the platform has so much to offer for all levels of investors to get and maximize the ROI.
The platform does offer a vast array of portfolio customization options in line with modern ideas regarding stock portfolios. It is easy to ensure your portfolio is diverse and balanced at the same time.
They also use exchange-traded funds that cover 14 different asset classes. In keeping with customization, their offerings also cover a range of risk tolerance parameters. It has never been easier to reach your investment goals than through the help of the Betterment SRI Robo-advisor.
There is also a flexible portfolio tool that allows customers to control more of where their money goes. If you favor a particular ETF, you can adjust your settings to funnel more of your investment dollars into that particular holding. For risk-takers, there are also options for
the system to chase higher-risk stocks or funds. Of course, you can make a portfolio that is all bonds or even one made up of all ESG rated options. Along these lines, customers can create a Climate Impact portfolio or a Social Impact portfolio according to their moral values. Automatic rebalancing is one of the system’s best features, which is performed daily.
See Related: Investing in Carbon Credits: Do they Leave an Impact
Betterment SRI Cons
Similar to other robot advisors, Betterment harvests tax losses on accounts that are taxable. Every day the platform will check for tax exposures on your investments, but it doesn’t offer a tool for direct indexing. This means that you will often miss out on opportunities that can save you money.
They do feature a tax-coordinated portfolio that works to fill the gap this problem creates. Still, you will already need to have tax-advantaged retirement accounts and taxable accounts with the platform for this gap feature to be effective. It also falls short in the safety net goals feature.
The 85% bond and 15% stock option are there to help deal with inflation, but actual advice is that the funds in an emergency account should not be used.
Although the company claims this fund is better than using cash, it can actually force investors to sell during a market slump instead of the stocks being held until there are gains.
One thing that is also not often mentioned is that using Betterment’s Cash Reserve may end up causing you to face some capital gains taxes, which will often be at the higher short-term rate as opposed to long-term rates. If you would instead take money out of your savings account, there would be no gains taxes to consider.
See Related: What’s the Real Impact of Climate Migration?
Betterment SRI Fees
Betterment Digital has a $0 minimum investment and charges an account management fee.
0.25% annually regardless of account level. On par, the investment expense ratio is an average of 0.11%. Betterment Premium has a $100,000 minimum investment and charges an account management fee of 0.40% annually regardless of account level. On par, the investment expense ratio is an average of 0.11%.
For accounts valued at over 2 million, Betterment Digital has a management fee of 0.30%. There are stand-alone live advisor packages for account holders and non-account holders as well. For a 45 minute session, the cost is $199. For a one-hour session, the cost is $299.
Betterment SRI Performance Ratings
Betterment is one of the better Robo-advisors on the market. It offers two options for service, digital and premium. Both have their own fee schedules, which set them apart and offer each account type.
There is no minimum investment for their digital account, making it a great option for those just getting started on building their investment portfolio.
For others who are seasoned investors or who have a higher amount to invest, the premium option with a 100k minimum is also available.
For both types of accounts, some tools are goal-oriented to help users set up their accounts and make the most out of their investments. Account-holders and non-account holders alike can also purchase a live advisor package, which most Robo-advisor sites don’t offer.
- Ease-of-Use – 4
- Features – 5
- Customer Service – 5
- Value for Money – 4
Several different options will allow you to customize your profile, and you also can invest in fractional shares. The low fees are a bonus which makes this platform ideal for hands-off, retirement, and new investors.
See Related: How to Invest in Electric Car Charging Stations
Betterment SRI Referral
Betterment SRI is one of the biggest ESG Robo-advisors on the market, and with good reason. They have been attracting quite a crowd of new clients in the past two years thanks to the easy-to-use features and goal-oriented options it offers.
Unlike other purely automated services, this one is a hybrid of robot and human advisors. For investors who are retired, new investors, or those simply looking for an affordable option to diversify their existing portfolio, Betterment SRI is a creative option.
The human advice option makes Betterment stand out, especially since the service cost remains affordable. You can click (here) for a referral discount, or you can sign up with the website directly at full price.